Nippon Steel Ties up with Sanyo Special Steel

Nippon Steel and Sanyo Special Steel announced on Tuesday they agreed for the partnership to improve the competitiveness. They establish Joint Study Committee to discuss for the detailed cooperation. Nippon Steel increases the share in Sanyo Special Steel from current 12% to 15%. Sanyo Special Steel will become an affiliate of Nippon Steel accounted for by the equity method. Sanyo Special Steel also increases the share in Nippon Steel. Nippon Steel improves the steel bar and wire rod business through partnership with Nakayama Steel Works and Mitsubishi Steel Mfg. Nippon Steel apparently tries to prevent Sanyo Special Steel from being acquired through hostile takeover by grouping the high technology special steel maker. They already have cross-shareholding relation. Nippon Steel sends current and former presidents of Sanyo Special Steel. However, they have no specific partnership in the business. Under the agreement, they seek partnership in optimum production including original equipment manufacturing each other, procurement, logistics, joint research and development and personnel exchange in production sites and laboratory. Nippon Steel plans to utilize higher special steel making technology of Sanyo Special Steel at Muroran works’ electric furnace, which Nippon Steel purchased from Mitsubishi Steel Mfg. in 2005. They will focus on each specialty products through OEM to reduce production cost and improve demand correspondence. Nippon Steel, which already has around 19 million of Sanyo Special Steel’s share, will purchase additional around 5.5 million shares for around 9 billion yen. Sanyo Special Steel also buys around 5.5 million shares of Nippon Steel for around 3 billion yen. Nippon Steel is one of the major special steel makers in Japan producing 150,000 tonnes of special steel bar and wire rod per month in April-September 2005. Sanyo Special Steel, which has 40% of market share in bearing steel, produces around 70,000 tonnes per month of special steel bar and wire rod.